The Current Spot Rate Is C$1

question 47

Multiple Choice

The current spot rate is C$1.362 and the one-year forward rate is C$1.371. The nominal risk-free rate in Canada is 6 percent while it is 3.5 percent in the U.S. Using covered interest arbitrage you can earn an extra _____ profit over that which you would earn if you invested $1 in the U.S.

• A) $.0018
• B) $.0045
• C) $.0120
• D) $.0180
• E) $.0240

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Definitions:

Patent Infringement

The act of using, selling, or manufacturing a patented invention without permission from the patent holder.

Patent Issued

The grant of exclusive rights to an inventor by a sovereign authority, allowing them to exclude others from making, using, or selling their invention for a certain period.

Royalties

Payments made by one party (the licensee) to another (the licensor) for the use of the latter's property, usually intellectual property or natural resources.

Scuba Diving

An underwater diving activity where the diver uses a self-contained underwater breathing apparatus to explore beneath the surface of the water.